i ammberg daybreak." jonathan ferro alongside david westin and alix steel. future stable. 1% and thewn 2/10 of dax off almost 15 points. the cable rate digests the political turn in a stable labor market. yields unchanged on the u.s. 10 year. breaking moments ago, morgan stanley reporting third-quarter earnings that appeared to beat estimates. shares are hired 2/10 of 1% into the premarket. at 6.7 economy grew percent in the third quarter from a year earlier, in line with estimates. signs of stability could pave the way for china to deliver on some reform measures. the stage is set for the third and final presidential debate and a new bloomberg politics poll of likely voters shows

hillary clinton with a nine point lead over donald trump. a special tonight ahead of the debate at 8:30 p.m. david: we are joined by alison williams, senior banking analyst from bloomberg television, and laura keller. i think for morgan stanley what i was looking at was the equities to see if that was going to beat goldman sachs from yesterday. we did not see a lot of good numbers out of the other banks. only jpmorgan was up a little bit and goldman sachs and we are trying to see who one. it looks like 1.9 billion in equity trading versus an estimate of 1.8. they did not give a lot of color in terms of what happened. at looks like maybe high results and delivered as -- in

derivatives and cash. david: that is the answer on equities. what about fixed? alison: a big beat. billion, as we5 had mentioned yesterday analysts did expect them to have the biggest gain haste on an easy comparison but even without that comparison it is a big number. the target after they made significant cuts to their unit last year was about 4 billion analyzed, about a billion a quarter. survey, news had done a analysts were expecting a billion a quarter. alix: let's break down with thick and equities. --gan stanley laura: i think for morgan stanley equities is very important but as i was alluding to, james gorman was talking

about this, trying to get to the $4 billion revenue number. some quarters are going to be better and some are going to be worse, it is a flick this is one of the better ones. -- does this make up for last quarter? are totally back into that hole where fixed income is at the bottom of the debate. david: what about investment banking? what do the numbers look like? alison: it is also coming in that are than expected and more importantly the wealth business and a pretax margin coming in at 23%. i am not sure if there is any adjustment but that is an increase over last quarter. david: as allison says, that margin for wealth was something everybody was looking at. they need to get that up to get their return in equity up. laura: at this point when they are pulling back, wealth

management and aggregates are sort of their biggest pies so if you do not see the margins you want you have to wonder overall how do they get there. alix: we now have the big banks having reported. we sell the fake income growth. -- fixed income grow. is it sustainable? we have had several years of a secular decline and we have been waiting for a cyclical pickup. , helpedhis quarter beat by some of the post-brexit trading. september and october have been better so far and analysts will look for that sustained. the other part is the cost side. we have continued to get some good results. alix: the chart you are looking at is the fake training revenue from all the big banks and it is updated to show what we saw from morgan stanley.

you can see the jump in the second quarter. is that sustainable? have: what is next and they positioned themselves to succeed despite the whims of the federal banks and a cb, or are they going with the wind? alison: i think there thanks are trying to make enough cuts to improve profitability -- i think the banks are trying to take enough cuts to improve profitability and that is where they have made a lot of progress . we have seen some improvement, and the other positive thing as last quarter it was brexit. this quarter it was really sort of more broad-based activity. , sos a cyclical business obviously a cyclical left in revenue will help but rightsizing the cost base is something that can control. jonathan: alison williams, senior banking analyst for bloomberg and laura keller.

if you want to follow the action on morgan stanley, you can do that on the top blog. saudi arabia poised to sell a record $17.5 billion in the biggest bond sale ever from an emerging market. .oining us is matthew martin great to have you with us. there was some concern about a conversation at the roadshow that perhaps it would dampen demand. does not look like demand is down in any way. matthew: exactly. the order book of around $60 billion so clearly had investors -- clearly investors have put aside -- and it shows the global hunt for yield that there has been a big story over the past couple of years, is really continuing. that is fed into the huge order

book that saudi arabia has managed to achieve. it has been a great success for saudi, especially as a debut issuance and it looks like we will have an issue up to 17 and a half alien dollars, taking it the largest -- 17 and a half million dollars, taking it the largest emerging market sale. jonathan: the story today in the middle east is this is trading at a premium and trading rich. debt rallied off the back of this. is that the story that saudi even though they had to pay up next are 100 basis points, they got it away pretty well? matthew: i think so. it is always obviously with this sort of issuance, there is the juggling act between size and pricing. the fact that we are seeing talk of a final size around 17 and a half billion dollars a click

they are probably choosing size overpricing. -- i think they are probably choosing size over pricing. i think that is reflected in the order book to have managed to put together. the ripple effects of this while still see that start to feed out over the next couple of weeks in some of the other bond issuance which has already come out of the region. some of that is repriced because we already had some saudi companies which have issued previously. repricedl have to be to reflect where the sovereign is coming out. jonathan: great to have you with us, matthew martin. that is your update on the markets and the business news. let's get you the headlines with emma chandra. trump is going to win the white house he will need a historic comeback according to the latest bloomberg politics national poll. in the clinton leads

poll was taken after the leaked video of women coming forward saying trump had assaulted him. trump and clinton square off in the third and final debate. chris wallace will moderate. he will focus on immigration, the economy, and the supreme questions on as fitness to be president. mark halperin and john heilemann will host a special before the debate beginning at 8:30 p.m. eastern time. merkel warns not to expect any miracles when she meets with vladimir putin in berlin today. it is him a must certain that the fighting in syria will come up. germany, the u.s., and the u.k. are considering sanctions over

russia's bombing of the syrian city of aleppo. global news 24 hours a day, powered by our 2600 journalists and analysts in more than 120 countries. i am emma chandra. this is bloomberg. alix: u.s. equity futures inching higher this morning, but we have some stocks on the downside. one of them is intel. third-quarter earnings did beat estimates, revenues were up 9% year on year, but it was the readthrough for what it meant for the pc market. consumer pc demand is better but not strong and it sees makers cutting inventory. moving over to yahoo!, slightly higher in the premarket it beat on earnings in the last quarter but core revenue fell 15% year on year. increased consumer customer traffic despite acknowledgment of the data breach. the question is what it means for a yahoo!-verizon tied up. -- it gets a huge amount

of its revenue from apple and that stock is getting pummeled in the free market, citing fears price competition -- fierce competition. jonathan: thank you very much. steady as she goes, china's third-quarter gdp takes the -- jonathaner to krinsky joins us. from new york, this is bloomberg. ♪

jonathan: from new york city, this is "bloomberg daybreak. here is the tone of the market. futures marginally positive, up 15 points on the dow.

an upside price on wall street from morgan stanley earnings. this is how the stage is set at the cable rate a little firmer. we pull back on dollar-yen a little. the 10 year up one basis point. china's third-quarter gdp rising 6.7% year over year, in line with estimates. signs of stability in the world's second-largest economy open the window forget curbing measures. joining us is simon male. great to have you with his program. i am the cynic around the table. i'm told they are rebalancing the economy so i'm going to talk about fixed asset investment, up september. a 20.1% pop in investment from state firms.

what does that tell you about this economy and the prospect of it rebalancing? if therel it tells you is very limited loan demand from the private sector. if you look at private sector fixed asset growth it is only 2% . you are not seeing the banks lending into the private sector. you are seeing the banks lending into the household sector. you have seen an enormous increase in residential mortgages and that is what is driving a property market that we think is now entering bubble territory. if you look at the economy broadly have seen this ongoing .ebalancing towards consumption if you look at what is going on in consumption, it is growing i think at 71% of gdp growth is coming from consumption. the vast bulk of that consumption is coming from the boom in residential property transactions and that is not a healthy sign for the economy.

with a residential property market running out of control, that raises real risks and it is something we are concerned about. , we saw two weeks ago measures to cool the property market. the government will be monitoring. and we could see more measures coming. that casts the question of growth over 2070. anythan: have they got other option but to boost credit again? have we gone too far to rebalance things? simon: there are other options but those are very difficult options. they are the options of ongoing state owned reform. to try and fix the property market you need very real reform in terms of land policies. one of the reasons the property market is running away his land is not available in the cities were people want to live. the land supply is being

controlled and you need fundamental reform to make land available. this is a system where the local governments are being forced to raise revenues. the easy option is to try and stimulate through credit growth. alix: bloomberg intelligence points out that we see all that debt but the gdp has been stable despite the fact the monetary conditions have tumbled a touch. does that give them more room to introduce those reforms? simon: it does give a little bit is theom, but our view underlying economy has been significantly stronger than that 6.7% number in recent months. the overall number has been somewhat distorted by some very depressed provinces, the rust belt provinces where you have seen gdt -- gdp contract.

average ofmber is a a country that is an enormously diverse country. if you look at the growth rates in more developed provinces, they will be much stronger. much of that is being driven by rising property prices and transactions and that is not a healthy path for the economy to grow one. this is something the government needs to address. david: how does this all end? price increase and a tier one and two cities and a 60% increase in homes. simon: what the government is trying to do, you saw over the holiday two weeks ago, across 19 cities property measures introduced to try and raise the down payment levels to make it harder for people to buy, to introduce direct restrictions on purchases of second properties. what will hopefully happen is the mind of the presidential

buyer will change. sentiment driven market and what you are seeing at the moment is people panicking into the market at unaffordable levels because they are worried if they do not they will be left behind so what you need to see is a change in behavior. if you do not see that, things could get very nasty and i think you will say more jerk connie and measures introduced by the government. -- draconian measures introduced by the government. obama tellsent donald trump to stop whining as he ramps up claims the election is rigged. we will unveil the results of bloomberg's latest poll. we are less than three weeks from election day. this is bloomberg. ♪

this is: -- david: bloomberg, i'm david westin. a pullout from bloomberg

politics pointing out that donald trump needs a real lift if he is going to turn things around. mr. trump appears to be losing support even among his core voters, men and the less educated. we are joined by ben brody from washington. take us into the numbers behind the numbers, what are the numbers that are most important? ben: i think the numbers that we are seeing that is driving what might happen over the next 20 days is men, white women, and college educated, these are demographics that have not only driven donald trump but driven republicans for decades. they are moving toward hillary clinton and she has leads with them that are sometimes within the margin of error, sometimes just outside. she has leads with them consistently and what that shows is that she has the momentum moving in her direction and she may also be able to move the

race such that down ballot races will also bring more done if it does benefit to democrats than we had initially been thinking -- benefit to democrats than we initially had been thinking. david: how much can we rely on the polls? polls have been wrong in the past, and donald trump yesterday raised the question about these polls. .r. trump: they say we are tied i do not think we are tied. one says we are two up, one says we are four up, one says we are six or seven down. david: does mr. trump have a point? ben: polls vary widely in quality and assumptions and in the people that they ultimately pull. the polls that we look at as the most scientific, those that are random, those that are conservative about the estimation they make about who is going to turn out to vote,

and look specifically at who has turned out and who is serious about turning out. those show consistently what we are seeing. a seven point race in clinton's favor and a nine point race as our poll just showed. these can include hundreds of polls on the state and national level, are showing a clear and consistent race that we have been saying for months at this point. it fluctuated and trump did take the lead recently but what we have been seeing is pretty consistent. alix: tonight, walk me forward. what does hillary clinton need to do to put the election away? many were expecting her to do that in the last debate and it did not happen. clinton's task has been to be concrete about her policies, relatable and how she comes across, and to put donald trump into positions where he comes across not being particularly presidential, or he goes into

those insults, goes into the gutter. her ability to put him in those positions could really crystallize things in the last three weeks. david: how much of her job is to recede into the background? we have not heard a lot from her. how much of the strategy is just to say, let's let them talk some more? ben: as long as donald trump comes out with insults, that will be one of her primary goals . if donald is going to come out with briefing and stay on his economic message and talk about this new anticorruption initiative, she may need to come back. she may be having a very tough debate. she has had a few tough weeks with the alleged wikileaks disclosures and she may need to answer for them. i am sure chris wallace is going to be asking about them. he is a very tough moderator. david: it is chris wallace from fox news and it is a debate that

is supposed to be on economic policy issues, not on any of the things that donald trump wanted to attack. to what extent will chris wallace be able to limit mr. trump? ben: he has typically shown he has been able to do that. david: he used to work for me, i know that firsthand. ben brody is bloomberg politics reporter. tonight mark helm -- mark halperin and john heilemann will have a predebate discussion at 8:30. ,he last of the big banks morgan stanley edging higher after a 57% spike in third-quarter profits. this is bloomberg. ♪

alix: here is what you need to know at this hour. morgan stanley reporting third-quarter estimates that eat estimates -- beat estimates, 57%

up in third-quarter profits. china's economy grew 6.7% in the third quarter, in line with estimates. could paveability the way for china to deliver on debt curbing measures. stage is set for the third and final presidential debate and a bloomberg politics poll shows hillary clinton with a nine point lead over donald trump. with all due respects john halperin and john heilemann will at 8:30.ecial tonight jonathan: equities stable in the united states, futures positive 12 points on the dow. bit, 50.91a decent is how wti trades. yields up about one basis point on the u.s. 10 year and the

cable rate is stable throughout much of the session. the labor market looking ok. no drama at of the figures in the united kingdom. the european central bank is starting its meetings today and tomorrow and we will be bringing you mario draghi's news conference after the decision. our morning must-read is a bloomberg piece during mr. draghi some advice. central-bank hawks and doves alike must guard against temperate and reich disputes against monetary -- over monetary policy. be damaging not only for the central banks' theibility, it could damage future of the single currency project itself. jamie, welcome aboard. tell us the situation mr. draghi has, what this piece says is there are hawks and there are doves with different views about

long-term inflation expectations and mario draghi has to thread that needle. >> i think the problem is that we have had some leaks from the european central bank about what their exit strategy for qe could be. some people in the market and some commentators have interpreted that as meaning that tapering is imminent. i think it is much more likely to tapering is this sensitive choice to be made when the program comes to an end. we expect an extension to the program before tapering begins. jonathan: this is an absolute no-brainer. are you surprised by the amount of conversations at a ben had over this, the idea that the ecb would stop qe without winding it down gradually? the biggest question is the politics. we have a german election next year and the pressure is intensifying on the ecb. can you walk me through the significance of that? jamie: i do not think politics

is changing vastly toward the ecb. , for the inflation target to be raged in the eurozone -- reached in the eurozone, and it is significantly below that, we need inflation to be above target in germany and below target elsewhere. that is how you get to the average rate, so i think germans are worried about ecb policy because it conflicts with years of tradition over inflation, but that is what we need to see. we need to see the orange line move toward the white line and the white line move up further. alix: the market was talking tapering because the ecb would not have enough bonds to buy, not because inflation was getting to that target. we are not going to hear any sort of warned on that tomorrow, but what is your estimate of what the ecb will do to tackle that? been prettyhave

resolute about their ability to conduct the program and implement it smoothly. we think because bond yields have lifted a little bit the pressure is off so we are not expecting an announcement on thursday. but the program is big. continue beyond march some changes would have to be made and we would expect that to be issue limits that the ecb allows itself to buy. that has been lifted quite significantly and that is the way it can unpick it straitjacket. why does mario draghi refuse to discuss this and why does he keep saying this is not a discussion happening at the governing council? many look at this and scratch their heads. we know they are sent to run out of available assets to buy so they must be discussing it, so why is president draghi refusing the idea they are having that discussion? jamie: i think he is trying to

avoid people misinterpreting it. there is two ways you can approach this, by more assets or make more available -- by less assets or make more available. fantastic to have you with us, thank you very much. be sure to catch full coverage of the ecb rate decision at 7:45 eastern, the news conference at 8:30 eastern, we will bring you that live and in full. president draghi is stuck between a rock and a heart place -- hard place here at do you think bonds are going to do? they will rally and then it will go forward. 2017 which isarch why many people expect a decision to be made not now but in december. david: the longer he waits the greater the uncertainty and the

bigger the move when he makes a decision. turning back to our top story today, morgan stanley reporting third-quarter estimates reflecting a 57% rise in profit as fixed income revenue almost tripled. joins us now on the phone. give me your biggest take away of the morgan stanley quarter. steven: the primary driver of the beat, a reported $.83 with an expectation of $.63. our assessment had been that ahead of the print, as he saw strong results across the group predominately on the fixed side that it would drive more of a ho-hum response from the market. the fact that there were other , theyves in the report surprised positively m&a which

saw an improvement quarter on quarter. wealth management lending saw , lending up 7%. they demonstrated really good cost control and the hope is that the bank is going to in a strong revenue quarter be disciplined on expenses. they demonstrated that as well. you did have loftier expectations but i do think they surprised positively. alix: can that strength sustain itself? -- only soch more much more cost-cutting morgan stanley can do. what is sustainable? steven: on the fixed side, there is some strength. that could be a little tougher to repeat. i would say the back half of last year, first quarter of this year was extraordinarily challenging. wheres the first period we have had two consecutive quarters of growth on fixed since 2012.

it seems we may be hitting an inflection point. two quarters does not a trend make but it is certainly an encouraging sign. commentary around the third quarter in october than some of the media calls has been constructive. jonathan: i think we might get a little too far ahead of ourselves given how flat the year on year basis effective. it was an ugly quarter last time. maybe the big standout is the big push morgan stanley made into wealth management. can you talk to me of how significant that is? steven: it is really critical. a lot of investors want investment banks to diversify their revenue profile so it is critical for them to demonstrate progress on the wealth management side. a big focus area was the lending part of the business. the reason being, it tends to be much higher margins so you will say more of that fall to the bottom line.

it is also less capital intensive. as regulation becomes increasingly more onerous, the hope is that these banks are going to really make an effort to push growth in more regulatory friendly capital intensive areas. alix: you have a buy rating on the stock. trading around $32, $33. what gets us to $38? steven: it is continued progress on the capital return side and the ability to get towards that 9% r.o.e. target. 11%official target is 9% to that getting to the lower bound i think would be sufficient to get the stock to the high 30's. this is typically a seasonally challenged quarter. they actually did 8.7 so i think you are seeing them grind closer to the lower end of that profit. alix: third quarter coming in

8.7%, steven chubak, thank you very much. earnings and decision. the last time and earning started with straight swings in gains and losses was 16 years ago. are there too many unknowns for stocks to climb higher and investors to have conviction? check out some other stocks moving on earnings, intel taking a hit after a 20% jump over the past six months. this is bloomberg. ♪

emma: this is bloomberg daybreak, i am emma chandra. coming up later, an exclusive

interview with michael dell. from new york city, this is "bloomberg daybreak." i am jonathan ferro. economic growth has sent the index into a seesaw of gains and losses. .oining us is jonathan krinsky there a difference between complacency and a lack of conviction? jonathan k.: there is a bit of difference. charm, seeing this alternating days up and down but this is nothing new. this is what we have been seeing for the last two years. rolling sector bear markets, internal rotation, and that is resulting in the stealth bear market that will resolve to the upside in our view. jonathan: why a stealth their market? jonathan k.: if you look at the

, the declinegroups from the 2016 loans was about 12%. haveeason the s&p did not a 20% decline is because it occurred at different times. energy and materials got cut in half and then semi-cutter -- semiconductors went through to the banks, to health care. it never happened at the same time so there has been a lot of chop in the overall index level but we have seen this internal rotation. alix: better earnings out of all the investment banks, does that propel a different story in the market? jonathan k.: it is something everyone has been waiting for. we had this been out of the retail index. banks are still -- are doing a little bit well and if you look

technology,pared to the technology bubble took 12 years to draw down and become leadership again so we are about seven to eight years off the financial crisis. it is probably going to take a few years before they can become leadership. jonathan: you have some changes to regulation, you had the brexit decision, a massive bond issuance in august. does that continue and is the bottom line, do you need growth? unique curves to be steeper. curves to be steeper. as are not going to happen anytime soon. we are actually looking at with the stocks are doing as opposed to what the companies are doing and we look at the enter market relationships. the curve has been flat for pretty much all year. basis point level

is a key resistance and if we can get above that that could suggest further steepening and the curve. alix: we take a look at the u.s. 10 year yield, above its 200 day moving average. we just had a golden cross. how much upside for yield and downside for price do you expect? jonathan k.: we think 2% on the 10 year, which is not a big call. yields globally are in the secular bear market and they have been going down for 35 years. have we seen a bottom in yields? yes, it is always tough to call the bottom. i think you need to get two and a half percent to start thinking about a change in the structural picture for yields. alix: what happens, is that the sign to buy the dip? jonathan k.: in bonds? .e are more of trend following if the actual trend in yields has shifted and if you get above

2%, there is some long-term trend shifting and we would not be looking to buy bonds that would sell on rallies because the primary trend has changed from a down trend in yields to potentially an uptrend. alix: what is going to lead s&p over the next few months? jonathan k.: technology is one of the strongest sectors. we talked about semiconductors. 80% of technology above their 200 moving day average. technology within the s&p 500 is now the highest weighting since 2001 so it is the most important sector because of that. there is still plenty of opportunities there. jonathan: jonathan krinsky, great to have you with us. time for other stories making headlines. here is emma chandra. executive cohen -- he

will be appointed chairman of mitsubishi. hasjapanese automaker agreed to sell a 34% stake following a scandal for improper fuel measuring. computers,demand for and the chips that run them. the largest chip producer may miss estimates. demand has not come back. the obama administration is proposing a sweeping package of consumer protections to airline passengers. they would get refunds when their bags arrive late and there would have to be more transparency on ticket purchases involving online sites. airline regulators say it would be bad for passengers and the economy. jonathan: it is time now for

bloomberg trends are we take a look at the top stories on the bloomberg. you can find these at read go. i'm going straight to u.k. theployment, in line with previous month, in line with expectations, wage growth at 2.3%. it stabilized around two and a half percent that real incomes are about to get squeezed as inflation is picking up. we will have that conversation about real incomes and nominal wage gains. irving fisher used to talk about money and the only thing that matters is the nominal picture. for any consumer that will go out of the u.k. and experience higher costs, they will feel that squeeze. alix: what does mark carney do? he said he is going to let inflation run hot. jonathan: he has a story between wage growth and real incomes

being squeezed. them, they have got to target the capacity that will be generated off of the back of this. we have seen this movie before. the bank of england and governor king, you saw what happened to inflation afterwards, it rolled over. governor carney taking maybe some of the playbook from governor king. alix: theresa may seems to be fighting him and that is a different conversation between the government and central bankers. yearsan: it took over 300 for the bank of england to gain independence. the inflation target did not come until the late 1990's. idea.ck is a new they want to speak to those people and say, we are looking at you, not just the savers but the poor as well.

that is what you are seeing more and more of, such as in the u.k. but the you -- europe and germany. alix: front and center for the trumpet election. happening in japan, foreigners are dumping japanese spots. 1987, aest exodus since $59 billion outflow tract by bloomberg. the reason why i find this so important is because it is too much for the boj to make up. it is in the market buying etf's. foreigners are fleeing the market more than the boj is in their buying. that truly is a reflection of what foreigners feel about the policies. jonathan: confused. he knew exactly what he was andg to do, smack the end you would buy and go along and that would be great.

right now i do not think anyone understands what the boj is up to. alix: when you had to fiscal stimulus, they would rather do that because they are afraid of what they might not be able to deliver at. coming up, china's economic growth remains stable but one area of china's market is seeing a huge boom. this is bloomberg. ♪

alix: this is "bloomberg daybreak." the number of the morning, 6.7% third-quarter gdp for china. what is the cost of stabilization in china? this chart takes a look at outstanding credit growth versus national gdp growth. the orange line is credit growth and the white line is gdp. credit growth is almost double what we are seeing in gdp.

if you take a look at credit expansion as well as bond issuance, the pace is closer to 15%, almost triple that we are seeing in gdp. how much more bang for their buck can china have when it comes to the stimulus? are we reaching a point when the stimulus no longer has the boost effect on gdp? if you are having so much credit growth in the economy, what does that do to the property sector? a bubble in property. new home sales were up 60%. what is the fallout? if you take a look at developers , this is a completed investment in real estate development and it is up only 5%. the yellow line is the trend line going back to 1998 and we are well above the trend. buyers are interested but developers are still a little reticent. you do have a property curve

when it comes to buyers in about 21 cities. construction really lights the fire of the china economy and boosts demand for concrete, raw materials, steel. it has a trickle into the construction sector. there might be hope for the government. the white line is the monetary conditions index. it has been tightening recently whereas gdp has been holding up. it gives a lot of room for the government to help stabilize the country as well. jonathan: coming up in the next presidento's vice will join us to preview the debate. from new york, this is bloomberg. ♪

jonathan: good morning and ."lcome to "bloomberg daybreak

i am jonathan ferro with david westin and alix steel. nine minutes from the cash opening in new york and futures up. market looks a little something like this, cable stable throughout most of the session that 12282. the yield just creeped higher, up two basis points and 1.75%. morgan stanley reporting that occurred there are names that the estimates. the reported a 57% rise in profit and almost tripled. shares up over 1% in premarket. china's economy grew at 6.7% in the third quarter from the year earlier. signs of stability could pave the way for china to deliver on reform measures. for the third and final presidential debate in the new bloomberg politics national poll, likely voters show up with a nine point lead over donald

trump. "with" will have a special ahead of the debate and 8:30 p.m. eastern. david: we are joined by alison williams, senior banking analyst for bloomberg and laura tiller, thinking the reporter. we just are the top line numbers. give us more detailed numbers. laura: morgan stanley, if i look across the board, great things expense, but media any fixed trading, all with revenue, all looking good. investment banking, too, which is important. , overall.od beat if you delve into the numbers further, i was looking at her lead earlier and the bank is still not at the target it wants to be. david: the return on equity. laura: correct. they came in under their target at 8.7 percent. better than last quarter but

something they need to do better on. david: what comes next? allison: i think what is interesting, we have had all the bank reports so far, and what is interesting is the stocks get better in the third quarter, but they are still year to date. they are down about 20% versus again in the overall markets, and what is interesting is if you look at what is driving that, and we do not make recommendations, this is an observation, but if you look at earnings estimates, the earning estimates or the median earning estimates is down 23's percent to 20 -- 20% to 25%. -- 23% to 25%. interestingly into this quarter, we saw the estimates stabilize. a 2016 forhs had your estimate increasing into the quarter and that is the first time it has happened since the second quarter of 2015. we have had a big leads on

bakes, the biggest part of the banking and investment business. coming out of the quarter, we are hearing that october is a lot of the momentum continuing, so i think that bodes well for an input into analyst estimates going forward. jonathan: seems like the perfect storm. if you look at the performance of each individual bank, you have goldman sachs, which keeps the bond trading position and they leverage what is happening. you have morgan stanley, who residence andity then left management delivered the margins. are we seeing the consolidation on wall street of the banks saying we will keep on doing this and this is diversification versus morgan stanley versus goldman sachs? laura: in a story i read a while back, it says that these big-time top global investment banks cannot all do everything for everyone. you will have to diversify. some a lot to get smaller, but

you see morgan stanley back away from on trading and we need to shift into left management. trading,lieve in bond .ut look where they are at you are starting to see people start to say, this is something i should specialize in and this is something i should not. with europe, as a see problems, deutsche bank has been interested in investors, too, what kind of market share what they keep going forward? are they able to do that bond reach for everyone and in every country? maybe not. pie ors this a larger eating a market share from european peers? lison: if you look at the size, it looks like it definitely is a larger pie. we heard some comments on competitors but we did see more activity in the primary, secondary markets in the

quarter, so indicators were there for a better market but it will be important and people will be looking, especially with deutsche bank. had underperforming trading business in the last couple of quarters. in general, it is at regional mess. -- regional menace. some of the relative performance was not surprising, but i think revenue is the concern and that is something they will focus on next week. jonathan: we have to wait until october 27 for deutsche bank, but they are losing market share for the u.s. place. laura: if you look at the bloomberg intelligence data, which aison's team deal -- alison's team deals with, there have been drops. they have had a lot of problems sold assets there, so you can see parts of it already. you don't really get lead tables in trading but you look at the revenues. was talking america

about this saying, if we look at that, you can kind of see it. he did not say it as easily to hearing your air but it is [indiscernible] david: it is hard to see where deutsche bank is specializing right now, but i wonder if there was one outlier, and that is jpmorgan, we can go through goldman, bank of america and say they are nearing their focus but it seems like jpmorgan will do all of the above. i think jpmorgan does do all of the above and they are one of the top-ranked businesses. the one area they say they need to work on his cash equities and they have made progress over the last couple of years. the other quick thing i would follow up with his turning back to the stocks. what you have seen this month is finally some outperformance and you have seen a bit of a gain versus the broader financial and market. the leaders have really been goldman, which gets the most of earnings, but you also have seen

it bounce back with deutsche bank and credits race -- credit se, but we will see how these play out into the corridor. laura: sorry to jump in, but i have to say that they predicted about three global investment banks, like jpmorgan, that can do anything and be that be all bank. david: you are always welcome to jump in. , thank you ands laura keller, let's get an upset of what is making headlines in the business world with emma chandra. clinton and donald trump will be a las vegas for the third and final presidential debate tonight. in a new poll from bloomberg politics, it shows trump could use a big win. tohas been to the head 47% 38% and trump has been losing

support among men and the less educated. with all due respect, they will host a special before tonight's debate. it will begin at 8:30 p.m. eastern time. more economic sanctions hanging over russia today. vladimir putin will be in berlin for a talk on the cease-fire in eastern ukraine, but that being overshadowed and it civil war in syria. germany, the u.s. and u.k. are considering whether to impose more sanctions on russia for the bombing of aleppo. for the first time in 17 months, the world did not set a new heat record but u.s. government data shows it was the second hottest september on record. scientists say the why their weatheron -- the phenomenon el niño faded in june and that is what it was not as hot as it could have been. global news powered by journalist and analyst in more than 120 countries. this is bloomberg. alix: thank you. u.s. equity futures, dow jones

up by 13 points in the premarket. some movers, gnc holdings up at to be meeting with chinese private equity suitors on the rumor that sparked friday. it has declined since then and now up by another 5%. that stock is down almost 40% for the year. also, with earnings after the ball yesterday, the earnings and revenue up 9% year on year, however, it is said that pc demand was better but not strong. did see makers cutting some inventory for the group. rounding it out with the right aid in walgreens, these companies went to marriage. in order to do that, they have assets.ff kruger was going to buy some of the stores and now "the new york post" reports that kroger will not be fined 650 stores from the deal. the fec has said that this was after maned -- after remain open

off to the deal closes. they could lock the walgreen deal of kroger backside, potentially right walgreens is higher by .6 of 1%. coming up, donald trump and hillary clinton square off in las vegas tonight. can the confidence of the undecided voter? we will discuss that and talk about the latest poll with libby cantrill. that is next. this is bloomberg. ♪

jonathan: this is "bloomberg ."ybreak let's get a check of global markets. about one hour and 17 minutes early from the cash open. positive.

14 on the dow jones, another upside surprise, surprise from wall street trade this time, morgan stanley. here is the situation in other asset classes, dollar-yen yesterday, a stronger japanese yen on the session. yields in shire spite of basis 1.70 five. crude back to 51 after saudi arabia talking about the prospect of opec output cuts, another nation that joins and it continues. david: you think it might drive up the price? jonathan: i don't know but i'm sure they're happy with the issue that got away. the decent premium. are alrighthink you right now, so now we talk about another surprise in politics. tonight is the third and final presidential debate. this is a live shot of the hall as they get ready in las vegas. it is supposed to focus on economic issues and we will see it chris wallace can keep it there.

bloomberg with a poll that shows hillary clinton with a nine point lead nationally. joining us now to talk about what is at stake is pimco executive vice president and head of public policy libby cantrill. what are you looking at? this is your job to sort it out. arey: as you said, there lots of polls going in clinton's direction. all looking at the average of the polls nationally, she is up by six points or seven points and weeds out any bias that one poster might have. david: that is the real politics. libby: exactly, and most importantly, the polling is in key swing states, so it is going to be difficult for donald trump to get to the 270 electoral votes without winning crucial swing states. us on someprovided sink states, ohio, north carolina, pennsylvania, ford and clinton are up in all and much closer in ohio, where some polls suggest donald trump is ahead.

bity: this is a little dated, but i think directionally, this is important. he basically needs to win florida in order to get to 270 electoral votes. the math does not work at this point and the fact that she is up in florida and in north carolina and pennsylvania, she has to in pennsylvania in order to get to 270 but the fact that she has this cushion david: is well for her. he studied politics are sometime. normally, if you had two other candidates, you would have a donald trump candidate focusing laserlike on pennsylvania, florida, ohio. is that his approach? it does not feel that way. his campaign has been very unconventional, to say the least. we expect in the coming 20 days that he will just be focused on these four states because he has to in these four states in order to get to the needed 270. david: he is questioning the

polls, questioning whether the legitimateill be and saying, do not believe the polls. what is the likelihood? we have seen that before where they have been wrong, so what is the likelihood? recentbrexit is a analog, if you remember, it basically tied the night before but had that really big undecided portion, about 10% in brexit. right now, 60% of the electorate is undecided or supporting a third-party candidate. david: that is a big number. electorate6% of the is undecided or supporting a third-party candidate. david: that is a big number. there has been a presidential candidate that has come back from the deficit trump cases, so an uphill battle. is it possible? david: that could of said about him as a primary candidate. libby: for sure, unprecedented

campaign all around. david: beyond the presidential, what are the ramifications for the house and senate? libby: i think that is what the focus among senate and congressional republicans will maintain the majority there. the senate looks a little bit easier to call in that it will likely go the way of the white house, albeit even if democrats take it back. they would have a filibuster proof majority which means they would have to negotiate with republicans on key issues of they would want to get their bills passed area in the house, republicans are now enjoyed the greatest majority since the great depression, 30 seat majority. it looks unlikely that they lose that 30 seat majority, but they will probably lose 15 to 20 seats but do they lose the whole majority? likely not but that is in the next 20 days where they have congressional republicans focused on down david: ballot races and defending them. david:what would hillary clinton need to do to create a wave

election and change both houses? past: if you look at history, usually, if the candidate is up by double digits, [indiscernible] waves that would be sufficient enough to win back the house. president obama beat john mccain by 7%. he picked up democrat -- democrats picked up 21 seats, so you would think that if that passed the prologue, she would need to be widening her lead by double digits and we are not there. david: coming back to bread-and-butter, what would that do to the markets if there were actually a switchable passes? libby: the market is expecting a divided congress with a democratic white house. a lot of the markets are looking at that republican-controlled house as an obstacle for hillary clinton to advance her progressive agenda, so if it were to switch to democratic control, it would have a significant policy implication

where we could seat and a perceptual bill being passed our delay, probably funded by increased taxes on the wealthy and with the affordable care act, as well. , andhan: so after brexit the bookies got it wrong, they conducted their own exit polls and they were wrong, as well, so what are you guys doing and looking at? i looking at these polls or something else? libby: i will say that there are differences with the brexit dynamic and i would put it out that the polling in the u.s. is better, more complete, more comprehensive. also, because this is not in national elections the one that comes down to a couple of swing states, it is easier from a pollster perspective to get higher-quality polls. about thisn talking internally. we are long-term investors so we have the luxury of having a longer-term view, but if you are a more short-term investor and going into something that could the volatile times and reducing

risk would likely be one strategy to pursue. david: great having you here today. libby cantrill, pimco executive vice president and head of public policy. tonight mark halperin will have a predebate special or 8:30 pm eastern time, followed by the debate at 9:00. coming up, thanks, but no thanks, what aberdeen is saying they are doing with saudi arabia. details, next. plus, the ecb begins a meeting to review interest rates today with an announcement tomorrow. will president mario draghi hints at any tapering? a preview, next. this is bloomberg. ♪

jonathan: this is "bloomberg daybreak." two saudi arabia we goes, with billions of dollars in the biggest bond sale ever from

emerging market nation, according to people with knowledge. joining us from the by, sam, who -- from dubai, sam joins us. they are concerned about the future crude and then came along baucas their -- wit. sam: goodness only knows where it is now. it is important to know that during the face of this sale, saudi arabia went to the u.s., london and did not go to asia. not because it is not when asian money but because that is how confident the kingdom was of securing a sizable backstop for this issue in the asian market. probably underpinning that $67 billion, but they said to expect an issue of up to $17.5 billion. up until now, the market for an emerging market sovereign was

60.5 billion, solved by argentina earlier this year, so it would put saudi as the biggest e.m. issuer, andrea waiting for the final details now and pricing is almost sorted. we are waiting to find that final number and what it will be. jonathan: let's take a 10 year and spread it 100 basis points over treasure, 40 basis points higher across maturities. is it looking cheap because based on the market reaction over the middle east today, investors think so? yes, i think the pricing on this issue has caused everybody and reassesscause the debt in the region. saudi arabia was expected to print higher than it is looking against caps off. if you take all three tendencies, about 45 basis

points, which is very solid, indeed. below,s rated two steps but well within investment grade. i think it is aggressive pricing, size of the issue, investors now reassessing economic strength and the outstanding bonds in the gulf nation. we are seeing a rally across the bonds at the moment. to sound greedy, but if this was an equity ipo, today this price and not ask enough? sam: i think they had a fine line to walk. they needed to ensure that this was a blowout deal. this was their debut and a lot of eyes watching and bloomberg clients waiting for this one. they had to ensure that the order was huge and they wanted record selling for the middle east, the previous

record was $9 billion, so this will toward scott, even if it doesn't top argentina's. they wanted to set that out. also as the debut issue of, we see time and again that you have got to offer a little bit of a premium to get the investors in, to persuade them to take a chance on a new risk, so i think on the whole, they will be pretty please with the pricing and i think that goes to show by the amount they decided to take from the market. have deal.reat to we get the final pricing, we will get it to you. the other story is they want to come back to debut. coming up, we will discuss the equity market. this is bloomberg. ♪

jonathan: this is "bloomberg daybreak." let's get a check of the markets. futures positive, up about 30 points on the dow jones.

a decent session in europe compared to where we were two hours ago. we change to unchanged on the session. i will go through the other asset classes, cable rates big hop to the upside yesterday and stabilized at 123. dollar-yen down. 10 year yield now 175, up about two basis points and -- 1.75 and up two basis points. 9%.: pretty ugly, down by that follows a decline of 5.6% for august. overall, we have seen slow growth in have this starts and this is another confirmation of the, down by 9%. those impairments offering a different picture that was up high 6.3%. you have to have permits first before breaking ground, so a leading indicator on the positive side. august revised to the upside for building permits up .7 of 1%. housing numbers agree. david: you hope it is the timing

matter from month-to-month but a significant miss. as you sit on the heels of the decline last month. alix: slow growth, so down by 9%. jonathan: let's turn from data to today's morning meeting, where we hear what european banks are looking at. rallies with the moving average for the first time in over one year. sector is more company specific than systemic. we are joined by jonathan now. great to have you. how much of that is a read across from the outperformance from some of the wall street ranks in the united states? helps.n: i think that our main message from the european perspective is that european banks are in this world beating valley that was trapped for five years and the risk of moving to value trade, which was a positive sign up to investors. what we think is rejection and

global macro risks, so stabilization and the commodity and dollar markets with improvement there and reducing sovereign and from a european perspective, we see selective risk in certain banks, but broadly, we see this improvement. over the last seven to eight years, it has been stronger in the u.s. but less risk moving forward, so goes from valley trapped the valley trade. more specifically, it has come out of germany recently, you have a problem with deutsche bank. they may have to raise capital. bigger than they expected to be, and in line with the $14 billion put on the table from the doj. how much longer and how much doing to see from the regulatory side and banks themselves to get that risk premium apply to european lenders to come out? markets arertain

still having banks which need capital needs disorder breach the leverage, but remember over the last five years to six years, post-ufc, they have been looking at global macro risks, as well, so the main thrust of our story is global map -- mobile macro risk are on a decreasing call. when we look across europe as a region, one of the big macro risks we face is in the election calendar up next four quarters, big elections coming up. that creates uncertainty in the markets. beyond those, lower risk environments. ecb and the policymakers are doing a good job of delivering a stable recovery, so we can see the risks today, but when we look forward to the six months or 12 months, we think that is what drives banks. jonathan: i will pick up on the word lower and we will see lower rates and ask if that is a big problem. your bank's spread

and there's not much of the spread and they are complaining about it. do you see it changing in the european lenders? jonathan: what is priced into market, european banks, and it is at the system risk levels, much more selective, a mismatch between what is being matched and opportunity. on the fundamental side, their headwinds coming from though interest rates but also some positives, as well, so in every economy, you have seen the positive they'll tow in terms of loan growth and credit. fundamentals are mixed and we think the risk of selection, we think the mismatches there, so i would see global risk in the region coming down and we see an opportunity in the sector. jonathan: great to have you with us. thank you very much. alix: the other big story is saudi arabia planning to raise

as much as $17.5 billion in the biggest bond sale anywhere from an emerging market nation but they have to pay up to do that. here's what saudi arabia had to say about the u.s. benchmark -- for 30hree year year bonds. saudi arabia for 30 years, over the benchmark and how much they had to pay up. is it and not for investors? joining us on the phone is director of economic research at the gulf research center, and president of marquardt. dan, the order book is rumored to be something like $67 billion. what do anticipate at the end of the day? dan: it could be up to $100 billion. we know this is far beyond what the market and saudi or was expecting to do today. be book size was expected to $10 billion and it seems that

1700 $5 billion is more than enough, and then to what they were seeking right now. jonathan: how much of the demand is about the spread versus diversification? is this an extra plate to put in your portfolio? which one is it because the spread does not look attractive? ofn: in the zero environment interest rates, if not negative, this is a attractive for anybody around the world, but it also has to do with the convincing case of saudi arabia from forming, changing, reforming and going into this nonoil environment and has been talking about. i think they are very much into been and they have tw during convincing work. alix: take a look at my terminal, the bond yield versus the oil prices. you saw a rally today and yield coming back down with a correlation with oil price. it seems to me that they say kinder is a better play.

john: there is a panic in this vision 2030 plan and the price of oil is the number one thing, so this bond issuance is very much like an ipo of saudi aramco because the economy itself is based on oil. this is a first step and aggressive step into diversifying outside of the oil space. the bonds themselves are really this ad ist for that only increased their oil assets. alix: but it is also really about the oil price. that oil price rally in the right in time for the bond roadshow. does that mean that the saudi's have to keep oil at a certain level to keep investors interested in sovereign? dan: this is one thing i have learned in 35 years of trading.

when the saudi's say they want certain oil price, they get it. despite the reason to think there are a lot of combined out on oil production is not going to last, i do think they will stabilize the price and make it higher over the longer term, but outside of that, there is a panic inside the production outlined. they are unable to squeeze the u.s. producers to death, and at this point, they are willing to push on with a bond sale at a very good price. like your guest said, 100 billion already on the book, and this is something that they are doing because they simply think the oil market is as a long-term investment not as good as it once was. pricing, 215the basis points on a 30 year old -- over treasury, i would ask him where has it been the past years? if i hold back maturity, where

is saudi arabia going to be in 30 years? say do would go back and you make of that if saudi arabia is going to be healthy 30 years from now? the gdp right now is at 11%. do you take portugal or italy? look at 120 plus percent. 30 years from now, if the vision 2030 and national transportation plan, reform continues, they push ahead, sustained over time, and there is convincing evidence this will be a success. you talked to a lot of investors and they say the five looks attractive but i don't want to hurt the risk that shoulder risk. what is the argument there? the argument is that we still have not had the perfect deal because in the case of saudi and the other countries that issued lawns, we need to

see more of it, so big yields are going to be compressed and in the more natural environment. right now, 30 years from now is not exactly how it should look like, so the fact and will be tighter as they issue more over the next two years to three years. the plan is to issue $100 billion by 2020, so all of these spread are going to be much more tightly placed the coming years. alix: typepad that into your thesis, if the saudis are calling a peek in the global $1ket and they want to issue billion by 2020, is that when it rolls over? years, this next 15 is a very long-term struggle that the saudi kingdom was trying to turn themselves, one of more photos from an oil-based economy and it will take a long time.

my viewpoint, at least for the next 15 years, the growth and ability of the saudis to do an ipo, 36 capital they need, it is very good. i'm very interested in buying into the offering. alix: what is the [indiscernible] ? dan: it doesn't matter, the 30-year-old the liquid for the next 10. how hard i have to go to trade the bond. in a good place, like these bonds and i look forward to that. take a look at the banks, liquidity is that the highest since 2007 have been 2008. what does this do for the health of the banks and their abilities? john: 68 billion dollars was taken up from the banking system yea it tells one me that banks of the more

liquidr. less that there will be obligation to buy government bonds as it goes into the international market, so bags will be put to go back into lending, more liquidity, the central bank, back into the pumping more liquidity into the system, so hopefully be will back in the private economy. alix: thank you very much. and the man who taught me everything about oil, dan. a new player in smartphones. after that sits and a record high at the positive reviews for the pixel some fun. to they capitalize on that issue? that is coming up, next. this is bloomberg. ♪

i -- emma: coming up, this covering communication ceo. -- the discovery communications ceo. alphabets hating a record high on positive reviews of the pixel phone near the first in-house design fun but off of its unit. for more, we bring in our global tech reporter. what is the pixel phone? adam: this is the first phone google designed completely and the reviews have come in for the device that will go on sale tomorrow. generally, positive. this software clean and the -- itre of the phone is

looks a bit like an iphone, but google has an opportunity here with all the problems that samsung has had to make a mark in the markets. alix: the rhetoric added samsung, not producing any more note 7 was that apple would start eating their lunch but is this a story of google and not apple? be.: it could it depends on the customer base. there is a pool of customers who prefer the android operating system, so for those, this device could be appealing. the tables are set for google to take advantage but they have problems. they don't have a big retail footprint like apple or samsung and built up over the years, so will they be able to get the phones to customers in a way that some companies who have been in the business longer have been able to do? david: it is about to the christmas, a time when people like to buy things like smart phones. how does google get that phone out the people so i can bite for my son? adam: they have partnered with

the two carriers. verizon is the main carrier and then here in london, they partnered with ee. you can also buy it online. it will be unlocked and you could take it to a carrier and get it hooked up that way. there do not have the retail stores that apple has and samsung has altered the a presence in a lot of different retail outlets around the world, so this is a new muscle that google will have to develop. it is something they can do well. the reviews have been very good, which is an encouraging sign for the company. comes to apple, we have preorder numbers. do we have anything like that for these google phones? dam: no. these companies can cherry pick what they decide to disclose. and the sun, for instance, never discloses their sales figure to that granularity. apple, and a sense, has been good about this closing unit

figures very at year, they backed away from that if it. it is unclear how much granularity we will get. ultimately, it will come in their reports and if we can see some big bump in some of the device sales that they show us in the past. goal?what is the end for awful, ecosystem, samsung, market saturation and the lower price income what is the end goal for googles pixel? free google made it software two operators within the can manipulate it, so the endgame is to get people using their services. their search bar, e-mail, maps. all these things that tie into advertising business, so the more people they can get on those services and not be distracted by some of the other software that is put on by other manufacturers and that is better, so it is about getting more people using the services so they can drive more

advertising revenue. thank you. google stocks closed at a record 1%.ed a, up .2 of speaking of technology, tune into an exclusive interview later today with dell chairman and ceo michael dell at 1:00 p.m. eastern. time not for other stories. here is, chandra. emma: morgan stanley posted earnings that beat estimates. the bank reported that profit that fixed income trading almost tripled. the ceo tried to convince investors he can lower costs and provide a steady profit from bond trading. thereurton posted second-largest oil services .ompany halliburton reported its first increase in north american sales since the oil slump in late

2014. many nations are willing to join opec and topping oil productions . that is according to saudi arabia's energy. he says oil produces can get a healthy out with a small cut in output. they had they -- they hope to have a deal by the end of next month. this is bloomberg. up, insulating investors from bats of volatility, but lately, that has not been the case. we will show you in battle of the charts. this is bloomberg. ♪

bloomberg.his is let's get the check of the markets quickly. about 37 minutes away. equities in europe largely stable. futures pretty flat. up 44 and the dow jones, four points up and s&p 500. i will walk you through other asset classes. cable rates around 123 and

yields higher by two basis points. year.n the u.s. 10 35 minutes away from the open. investors will pay attention to the u.s. central banks before the release due out at 2:00 p.m. eastern. texas, the fed president -- they will discuss economic history. numbers from american express and ebay out after and that is a wrapper some of the highlights. so much.anks time for battle of the charts and i wish you could see the contestants before. they are taking their entries, like a derby to make sure they are a little bit better. you go first. another facet of what we saw from china gdp data that cannot today. this is the gdp deflator that measures price changes at the economy wide level. if you take a look at what we

have seen recently, it moved higher to 1.1%, ever so slightly in september. the nineke a look at months we have viewed so far this year, it rose 5.7 of 1%, the fastest pace since 2014. -- it rose .7 of 1%, the fastest pace since 2014. back of the to more expectations for less stimulus. if you have growth stabilizing and some kind of inflation on prices and why they're moving higher, does that mean you can have less stimulus in the market that would leave some room for china's debt issues and issues and reform as well? this could be key then for monetary policy going forward for it david: good news -- forward. isid: good news is bad news good news. all right. most 6 is seen our billion words of input of this

year, so essentially, i'm looking at volatility, said this is 30 day volatility. this line is the spread of the low etf volatility versus s&p 500. under this yellow line means that it is less volatile than the s&p 500. above it is more, so we have a had marketere, we turbulence, people rushing into the etf, valuations of defensive defeated.ting check out what has been happening over here. this nice little stretch right here is 42 days that it has been more volatile than the s&p 500. to give you a frame of reference, every time it hits above this line, it actually only happens on average less than four days, so we are in the midst of this save lowball etf, the much more volatile than the broader market. david: so a sure bet is not just

a sure bet. exactly. you usually think history repeats itself but not always. david: love you both, i will go with dani. forgive me. alix: i might vote for her too. jonathan: he was seen onscreen marriage breakup during the commercial break. [laughter] coming up, we dig more into the earnings after morgan stanley. and that side surprising the markets, futures positive. 39, of about four points on the s&p 500. 34 minutes away and the caps on continues. this is bloomberg. ♪

♪ jonathan: from new york city.

for mock them to "bloomberg daybreak." i am jonathan ferro with david westin and alix steel. just over 30 minutes away from the cache open. dow jones up about four points and another site on wall street, this time, morgan stanley. in the u.k. labor market, stability. treasury, up on the 10 year, at 1.77. alix: morgan stanley reporting third-quarter earnings that beat estimates. 57% rise in profit as fixed income trading revenue tripled, shares hired. grew at 6.7y percent, in line with estimates and in the middle of the government's 2016 goal. signs of stability could hate the way for china to deliver on reform measures. the stages set for the third and final presidential debate. in a new poll, it shows hillary

clinton with a nine point lead over donald trump. with all due respect, they won't cohost a special at 8:30 -- they will host a special event that a: 30 before the debate at 9:00. david: morgan stanley beat estimates. ofare right in the middle the call right now. what are you hearing on the call of interest? >> in the prepared remarks so far, basically, just that it seems healthy, fixed income as we have discussed has really exceeded expectations, coming in above target. they have said that should not be taken as an indication they will make change plans. really just in line with some of the changes they have already made even though it is a strong quarter. also connotes, they said -- also a note, they said they would hit the $1 billion target. david: operation shame line is

what they call it. alison: at that they are on target to make it. they are at 9% this quarter. be at you said they would 20% but for regulatory changes. r.o.e. if they have the capital they had before regulations. the question is when is next? they said ipo activity at the end of the quarter was good. but are we learning about the next three months? they feelthink encouraged that extend the quarter, momentum did build in september. we heard yesterday that the strengthen ipo's of early september being half the quarter, said that this up. have are healthy, we heard from a number of tanks that while you into theto open them corridor, so i think from here, the focus is really going to

shift to the fed and monetary policy. in we get more divergent monetary policy and one that help volatility and trading activity? jonathan: did they seem a little bit more positive than yesterday? alsion: -- might be a difference in tone and in terms of the way people talk about their business. i think that what they have said is that strategic m&a remains solid. i think goldman has talked about that in the past. initially after breaks it, i think there was -- after brexit, they're a spirit in the markets. meanwhile, there is more uncertainty with europe. if you look at the confidence of u.s. ceos, we saw a jump in september. that has been a positive and what we hear from goldman and morgan stanley, confirmation of that heading into the fourth quarter. alix: we are hearing from james

gorman on the call saying that trading benefited from more volatility around brexit, so helping morgan stanley. you did say the fixed income team did not do anything risky to get this quarters of revenue. david: he also says are not backing up restructuring. we had three times the revenue, but he is still going. read the head. alix: he is sticking to the plan and a lot of reason you're getting the questions around risk is that obviously, investors are excited when you are asked, but when you said -- asked if there is something unique going on, are you taking more risk? if you can beat by that much, joining to be concerned that you could miss by that much next quarter? that is why i think morgan stanley is trying to come out activityrm it with

because with investors prefer to see is if you are making money by increased activity from clients and not in risk management or change it and how you lose your balance sheet. david: it is not just the fed but the department of labor and the change in those roles. they are not ready to say it how they will handle it. earlier, we talked to bank of america who expressed questions. how material is that to morgan stanley/ lison: obviously, it is material. it is something we increasingly hear about, so i did announce a change that is in line with that think what people expected versus commission based because of the role. we had black rock yesterday talking about the significance more, so we will move toward safety camps, passive investing, and i think that is what investors will be watching over the next two months. great to have you at

this. .ore from alison next week of course, the comparison, the base story, ugly third and fourth quarter last year because of what happened in china. year and6.7% year over estimates are right in the middle. 6.7 5% growth while the nation's growth is stabilizing. believes itment still forces formidable challenges. he joins us now. growth,e worried about you pull the debt lever and you put hard. how much longer can they do that for? >> they can do it for a while. air, people were worried about a hard landing in china and understandably so. they have a lot of challenges but the fears have dissipated. one, the government has taken

aggressive action to provide support in the short run. they are being successful and will continue to be successful for a while, but the medium term challenges for china [indiscernible] isathan: what i am seeing the short-term gain and long-term pain because of what is happening. it was a day were going to reform and that they are driving the investment. it is that the private sector. where do we see the pain in a big way? anytime soon. the government in china is afraid of taking steps that would compromise growth because so much of the legitimacy rests on delivering economic growth, so i think that is the fundamental problem. tell me i am -- david: a year ago in august, we saw a lot of pain in the stock market, or they encouraged retailers but it came crashing

down. any chance you may have a similar phenomenon? it is possible. the government did say, everybody in the pool and then they kind of pulled the plug. i think one of the things it did was dented this sort of laura -- aura of invincibility that sounded policymakers and china comes in i could see a sequel to that and property markets. look at myu take a terminal here, it can see the developers having relatively to strain. we hear about some property restrictions, but at the end of the day, not a lot of construction. what is the potential that the fears are overblown? josh: they are doing some things. nipped in the bud in the few areas, but the problems china that. not all of

china's economy had a once-in-a-lifetime supercharged growth. that is over the demographics turning, a lot of the lowest food has been picked. that is ok, but they need to shift their drivers of growth exports and manufacturing, toward services, toward complexion, and that transition is unlikely to be seen. the channel through the rest of the world through global markets, we see the fx channel. jonathan: we began discussing in the month of august, and the currency is substantially weaker since then, yet, no one is freaking out, why? josh: i think it was a bit of a shock last year people were worried this could open the door to a major move. i think what china did makes sense to some extent. that the worried

dollar was piggybacking on the wasars appreciation and it reducing their competitiveness with the non-us trading partners. it made sense for them to shift --targeting a basket of targeting [indiscernible] but the pressure on china has dissipated and that is one reason people are less concerned. david: for example in the united states, they cannot express fiscal another stimulus or banks on by the government and through state owned enterprises. when history gets written, we will reflect if that was an advantage or disadvantage? josh: short-term it gives them more control. disadvantage of a medium-term is it creates a situation where it is less exposed to market forces and could actually have greater imbalances and greater challenges i was talking about. alix: thank you. good to see you.

the newsn update on outside the business world, let's go to emma chandra. emma: donald trump will win the white house if he has an historic comeback to do it, according to the latest bloomberg politics national poll. hillary clinton leads in the four-way race and the poll was a series of women came forward, saying trump made unwanted sexual advances. the less educated and men have lessened supporting him. chris wallace of fox news will moderate the event in las vegas very among the topics, immigration, the supreme court. the topic almost certain to result in fireworks, with all "with all due- respect" will have a special before theebate at 8:30 p.m. eastern time. angela merkel is warning not to

expect any miracles when she meets with russia's president vladimir putin in berlin. he will ask for a four-way summit on the ukraine. germany, the u.s. and dictate say the art considering sanctions against russia over the bombing of aleppo. u.s. are saying they are considering sanctions against th russia after the bombing of aleppo. alix: overall, stocks down 1.2% for the month, but yesterday was the best in the s&p 500 saw since october, so a followthrough on this today basis. let's dig deeper and look at the andrs on the downside, expect pc makers to start shedding inventory in the fourth quarter. off by over 1%, despite the fact that they had close margins and

they were expected -- there are much i than expected. taking a look here and staying in tech, fiber optic company actually raises for your by 15%, and it grows getting a boost, as well as [indiscernible] , usedusing the 80 r heavily in the u.s., despite rain based in amsterdam. it is basically a ship that making equipment supplier for samsung scheme -- see a better read through for the rest of the year. david: how are oil prices are next.ng, also, michael dell at 1:00 p.m. eastern time for an extensive interview from the dell emc world conference in austin, texas. this is bloomberg.

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inx: we're putting oil focus, up by 1.5% today. opec could be inching closer toward a deal later in the month for technical roadmaps in november when we get the official meeting. the story is that opec will talk as much as they can now before any potential cut. some reason is that recent data shows that it might be happening. this orange line shows a rates on shipments from the middle east over to asia and it jumped to over $46,000. at the same time, this white line shows the number of charters per month, jumping in october to 141. it is the highest level per

october in about 12 years, so you have more ships and they're paying more money to ship oil and that could point to a stronger output from the middle east. joining us for the trade is chief market strategist at bullseye. do you think that is what we are in for for the next six weeks, oil on the market? allen: i don't think fundamentals are having impact. we are stuck between $50 and $52 and the crude market right now, so you may be seeing the classic buy the rumor once the agreement is actually out there. you may see some profit taking, but we have seen a healthy run up without any pullbacks. to me, that shows some kind of risk, especially when so extreme and positioning. saudi arabia also increasing deals to china because they are cutting prices. what are cutting prices. whatever the downside potentials of the market catches on? market broke out

around $47 for a while and we traded in a series of lower highs and higher lows and then had to break up. that targets about 54 or so on the upside, so it could come back to the break up point from a technical standpoint. you can see how the volatility has decreased with tighter ranges, going nowhere, only get below $50 a little bit but that has held strong. i'm impressed i what the market is not doing -- by what the market is not doing. a lot of have not gone skittish or nervous and we have not seen any dour movement to shake this up. alix: great points, week of fundamentals but the market is paying attention. potential $54 on the upside. coming up, verizon is said to be a bit uneasy on how yahoo! handles the hack investigation, that will be and that this could verizon added the deal?

this is bloomberg. ♪

david: this is bloomberg. verizon is said to be losing patience with yahoo! over the lack of progress on yahoo!'s investigation on the 2014 data and verizon a great to buy yahoos web properties in july for $4.8 billion. joining us now is all sweeney, -- is paul sweeney. yesterday, yahoo! beat expectations on profits and not revenues. does that help their case when it comes to verizon? paul: the numbers came in better. i think it might. 15% year overn

year and that continues the trend we have seen from yahoo! over several years, so they really do need to sell, but what was interesting is the total audience on yahoo! held pretty steady after the hack occurred comes the back is yahoo! ammunition when they sit down at verizon and say, this really has not impacted the audience or the people coming to yahoo! david: they will have to sit down and talk about the general counsel for verizon that said last week that it was the material, the first warning shot across the battle. tol: lawyers will have determine whether this was in fact a material adverse change to the business of yahoo!, such that it would require or allow verizon added to walk away or more likely to try to renegotiate some terms of the deal. it is with lawyers right now. alix: yahoo! said that customers

to continue to engage with the company despite the fact that they released the data breach, so shouldn't that say that they should skate past this? paul: that will definitely help them, and that clause, as we have spoken to our legal analysis, it is something difficult to prove, invoke, so it is on verizon to really say that it was a negative impact on yahoo! and the numbers last night suggest that david: maybe that is not the case. i find the root -- maybe is not the case. david: i find the reports perplexing. feel likeys they yahoo! is not being straight with them. what is wrong and what is being done to prevent that in the future. with verizon is frustrated transparency and lack of indication on yahoo!'s part. is saying they're conducting an in-depth investigation to figure out the impact and until they conclude

the investigation, there is nothing to disclose. theyon's perspective, expect more transparency given they have a $4.8 billion bid on the table. alix: more out of the results, saying that any kind of material adverse effect has been really, really hard, so that would be difficult for verizon to get a read on. david: this will not end up with a court deciding that, but who wants might there be to bid and if there is no one else to bid, you may have to knock off on the price. aul: verizon is the most strategic buyer. tim armstrong thinks he can turn around the business of yahoo!, so it is the right deal. at the time, and the like the right price. i suspect if there are changes, it would be minimal. david: i want to bring up the story trending high on netflix, the title is netflix is taking over hollywood and hollywood is not thrilled. higharts off with a

executive developer on fox who said, i am leaving. and they said no because there says theyact, but he are offering more money on netflix. it looks like netflix is going around hollywood. paul: the guy who actually runs the content side of net lakes is arguably the most popular person in hollywood right now. he has the biggest checkbook and it is wide open. looks like netflix will spend $6 billion on programming this year, maybe $7 billion next year, the largest of any studio, , so if youhollywood are a caterer, director, netflix is the higher of choice these days. jonathan: negative cash flow, how do investors feel about this? paul: they burned through about half $1 billion of cash and they're going to the debt markets the kind of fund this, but i think most investors feel

good because subscriber growth is there to drive revenue and profits and free cash flow in the future, so it is a longer-term play. jonathan: we traded at 321 times earnings. [laughter] c library much. it -- thank you very much. the opening bell four minutes away. futures positive, up 30 points on the dow jones, and another upside to cries on wall street, this time for morgan stanley. the pivot toward the u.s. session, the cable rates hold steady at 123. stronger yen day. fields higher, up two basis points. the open, next from new york. this is bloomberg. ♪

jon: futures are positive. biggest one-day pop since

september 30. the cable rate holds steady. you hear the opening bell sound. where are we? five to 10 seconds into the cash >> a little bit of follow through. s&p up two points. to lead the way. you have the weaker housing start. that weighs on some of the

homebuilders. avalon also down for little bit. .ven allen tends to follow weakness.e is that a weather issue or is that multifamily areas are topping up -- topping out and that will be a constraint in terms of the housing market. the bigger picture for the markets, ramping up earning seasons. is the market overextended? bank of america is bearish. this is the implied equity allocation.

this is where we have seen levels peaking. hate this rally. they are invested in it. : dan, we heard from alex, positioning issh in the market. when will it come off? >> i don't think it will. market here, the you will likely see this come down. there is a pervasive view that investors are bearish on the markets. whether you look at funds

positioning. we don't think that positioning a high. think it is a matter of complacency. the market has tripled since 2009. it increases your share of the portfolio. do you need bullishness or euphoria if you have complacency? you expect a correction by the end of the year. >> you could see it on the margin, that would cause the allocations to take down. if you look at the charts, you will see the changes in portfolio allocations come at times of shock and recession. that is the you would see to see those come down. the elevated chance of a correction, it has been amazing how the market has been.

we talkedi came on, about economic surprises and how those are rolled over. those started to improve. at that indicator today, it is into negative territory. earnings season has not been that great. if you look outside energy financials in tech, most of the sectors are slowing. they are posting the first negative quarter i have seen in this post crisis. . what winds up happening if there is a reversal in the bond market? it raises the question, do you need to change your portfolio allocation if you are geared towards cyclical exposure?

>> growth expectations are really high. what you have been seeing in the data is things are coming in less bad. we are on pace to do flat now. into the fourth quarter, analysts are expecting things to to amazing. bad in the first quarter, they are looking for 14% growth. expectations are too high. what we have heard so far, the industrial recovery people are expecting. >> is it possible there is a fair amount of cash sitting on the sideline? ise that uncertainty

removed, that might be looking for a home? >> there is a possibility that happens. there is a possibility that the market doesn't like uncertainty. you get an election that tells us your chance of tax is going up is higher, maybe that gets people to take paths. that may make people concerned. >> the start of the bear market could come in the middle of next year, but not to anticipate that . it is worth it. the best gains actually happened now. >> we did a simple exercise. we extrapolated that trend to when the next recession will

come. we don't think it is eminent. it would point to a recession, maybe at the earliest, the beginning of next year. you can't pinpoint the exact time of a bear market. it is not worth it to be selling. the minimum returns you have seen in the last two years is 32%. those last two years of the market. >> why do we say caches on the sideline and will come back in to equity? why will it not go where it has been going for years now? >> i agree with you. if you are in an environment

where you think returns are lower than they have been over the last 50, maybe you want to sit on more cash in general. if rates stay lower for longer, are arguments made that some of the cash could stay in bonds. i agree. cash levels are high, but i don't know that will change soon. jon: thanks. coming up, blackrock kicked off earnings season. companylook at how the did. it we are about eight minutes into the session here in the united states. we are up marginally across the board. from new york, this is bloomberg.

>> coming up later today, an exclusive interview with dell chairman and ceo, michael dell. john this is bloomberg daybreak. the dow up about 29. the nasdaq, little bit of a move. let's get more on what is happening.

>> shares are lower and on pace for their worst one day drop. it is worth noting, this is not the first time intel has guided down. they did this back in january. another drag on the open here, seagate technology. beat estimates by 25%. bloomberg intelligence analyst said the margins look even. the conference call started at 9:00 a.m.. perhaps something negative is coming out.

>> stay with earnings. a 3.3% rise. asked that management surpassing $5 trillion. craig, thenow, senior equity research analyst at credits lease. what is going to be the biggest theme we will see? there are new regulations in place creating a lot of change. we saw good etf flows.

we have had the janice henderson. blackrock did a bunch nine or 12 months ago. the industry is consolidating. you are going to have consolidation because etf managers are winning a lot of business. >> if you look back through, there is not much that in the way of examples. it is actually hard. you have to do it where you have this shared vision and culture.

>> what kind of tieups will we see? small,e are a lot of private firms. they are started in the 90's and 2000s. distribution is getting tougher. you have a lot of multi-manager toels which are able consolidate them. you have foreign players eyeing the united states. they look at the u.s. as the biggest market. they need to get bigger here. jon: they need their returns higher than their fees. do we really buy the idea that

we are getting mthe fees down. blackrock bought bgi. like those blackrock deals. out $110 million of incentives. a lot behind you. they doubled the size of their product.

>> the price war has been going. they all use the same indexes. they never had the lowest fees. it is like getting a mercedes for the price of a toyota. we think the shares will be a strong competitor. we call it a land grab. are going to give a lot of challenges to vanguard, the assets.f going down with efficiencies. there is not price and pressure everywhere. we are talking about u.s. retail. alternative manager, they have been raising their fees and some of their best products.

you can charge whatever you want. they are actually raising the seas. fees.sing the jon: great to have you with us. thank you very much. speaking of asset managers and low returns, coming up on bloomberg markets, chris will weigh in. is at 10:30 eastern. up next, the final presidential debate. strategy.ok at the that is up next. florham boom -- from new york, this is bloomberg. ♪

>> we will see donald trump face hillary clinton for a third and final time. our political, reporter from lost vegas. there are usually -- from las vegas. is donald trump actually prepping? what is the spin machine saying? >> it is going to be a show. i don't think anybody is going to be disappointed. donald trump will be talking he hashe rigged system been talking about, framing his campaign as the outsider who is going to go in and shake of washington. he released epic reforms in the last couple of days. we expect him to talk about that and rope it into the e-mails and stories coming out about hillary clinton.

hillary clinton is up in the polls. a lot of people think this race is hers to lose. best to be doing her not make headlines. >> i am interested in chris wallace. it is supposed to be about economic issues. donald trump's standards have nothing to do with economics. what is that matchup going to look like? >> chris wallace is highly respected. he is a tough questioner. we can expect tough questions from him. for donald trump, we can expect tough questions for him and hillary clinton on economics and immigration. i think you will ask for a lot of specifics from donald trump. expect chrisn

wallace to push on that. >> a poll shows hillary clinton up by about nine points. donald trump is pushing back against the polls, blaming liberal media bias for the polls. >> it is bad news for trump for a number of reasons. he is losing support among the groups where he was down in but he is losing his core base. lot to domp has a tonight if he wants to turn his fortunes around. to a lotave to speak of groups at the same time to secure his base, reach out to new voters.

somehow, he is going to try to do all of that. it is a hard thing to do. >> do we have any sense of whether donald trump is caring about the issues? steve has frozen, which usually means we have lost him. tonight, mark halperin will have a predebate special followed by the debate at 9:00. --we have more sed speak more fed speak.

you can tune and before you watch the debate. ebay and american express announcing earnings after the bell. theebay, investors watching impact and potential for capital returns. >> i wonder if it doesn't come from the fed presidents, but it actually comes from the debate tonight. i know donald trump has a lot to say about janet yellen. >> what ever anyone thinks of donald trump, he has become politicized. >> in the u k and germany, the 10th -- the tents matchup between the central bank and the politicians.

jonathan says what we are seeing is those things blur. conversation is one that should be had. maybe it is one we have a little later. 26 minutes until the session. positive one point on the s&p 500. another surprise for wall street. this time, morgan stanley. chinese gdp came in line. equities are stable. bond yields up a basis point. from new york, this is bloomberg. ♪

>> live from new york, i am matt miller. mark: welcome to bloomberg market.

>> we will take you from vegas to london. are watching.e new data on the u.s. economy shows new home can traction in september. we will talk about whether residential real estate is in a holding pattern. mark: oil rising for a second day. we are getting crude inventory data. we will break that for you in 30 minutes. matt: we will bring you an interview from chris aleman. can private equity produce a big returns?